Argentina

I mentioned the meltdown of the Argentine economy briefly in my last post, but it really deserves a post all its own. OK, the economy there is an absolute shambles, and it's probably to blame on overzealous austerity measures and pegging the peso to the U.S. dollar. When various Latin American countries did that in the past few years Alan Greenspan, or his spokesman, warned that the U.S. monetary policy would not take them into account and they could get burned. Now, I don't know the details of the collapse, and I'm only at the beginning of my economics training - I'll be taking Macro Theory this quarter, and hopefully we'll look at Argentina. However, my one statement would be that before everybody jumps on Argentina for not being Keynesian enough, remember that they weren't following Milton Friedman either. I think they were trying to follow him, but you can't be monetarist when you outsource your monetary policy!

This may be a loss for the Argentine pocketbook, but it's been a resounding victory so far for Argentine democracy. Imagine if this had happened 20 years ago. Would there have been 5 constitutionally selected presidents in 2 weeks???? NO! There would have been a military coup, and the political system would have collapsed. This is the crucible of Argentinian democracy, and we should all be cheering for them (and buying Argentinian). If the constitution makes it through this intact, I think we've got ourselves a very strong democracy on our hands.